PETALING JAYA: OCBC has lowered its gold price forecasts, citing a more challenging macroeconomic environment, but maintained that the precious metal’s longer-term bullish case remains intact, supported by central bank buying, reserve diversification and geopolitical uncertainty.
Precious metals strategist Christopher Wong said the bank’s revised outlook reflects a tougher near-term environment rather than a fundamental shift in gold’s long-term investment appeal.
“The medium-term constructive case for gold remains intact, but the near-term outlook has become more challenging,” he told SunBiz.
He said structural factors such as central-bank buying, reserve diversification, fiscal concerns and geopolitical uncertainty continue to underpin the precious metal over the medium term.
“That said, gold is being disciplined by macro again. Higher real yields, a firmer US dollar, hawkish Federal Reserve rhetoric and slower ETF demand have raised the hurdle for a sustained rebound. So this is not a structural bearish turn, but it does warrant a more cautious forecast path in the near term.”
In its latest Precious Metals Focus report, OCBC revised its gold and silver forecasts lower while retaining an upward trajectory, saying the change reflects a more difficult macro backdrop rather than a reassessment of the long-term outlook. The bank now forecasts gold prices to reach US$4,180 per ounce by September 2026, rising gradually to US$4,820 per ounce by September 2027.
Looking ahead over the next three to six months, Wong said gold prices will be largely driven by movements in real yields, the US dollar, Federal Reserve policy expectations and exchange-traded fund (ETF) flows.
“Gold needs at least one of these or more to turn more supportive for a more durable rebound. Softer US inflation, weaker labour-market data or a dovish shift in Fed pricing could pull real yields and the US dollar lower, improving the setup for gold,” he said.
However, resilient US economic data and persistent inflation could keep expectations of tighter monetary policy alive and continue to limit gains.
“Geopolitics can still provide support, but the recent price action suggests the transmission is not always straightforward, especially when markets are also dealing with US dollar strength and position liquidation.”
On gold’s recent weakness, Wong described the decline as a healthy valuation reset rather than the beginning of a prolonged bear market.
“Gold had rallied strongly and became more vulnerable once real yields moved higher, the US dollar strengthened and ETF momentum slowed. The decline is healthy to the extent that it removes some froth and resets positioning.”
He cautioned, however, that the correction could persist if real yields and the US dollar remain elevated.
“For now, the broader medium-term support remains in place, but the near-term path is likely to be more two-way and less aggressive than before.”
Wong also urged investors to view the recent volatility in gold prices within the broader macroeconomic context.
“Investors should see the volatility as a reminder that gold is still sensitive to macro conditions, even with strong structural support from central banks and reserve diversification.”
He noted that while gold continues to serve as an effective portfolio hedge over the long term, it remains vulnerable to sharp repricing in real yields, a stronger US dollar and ETF outflows.
“In the current environment, rallies may need confirmation from lower real yields, a softer US dollar or renewed ETF inflows before they look more durable. The long-term case has not disappeared, but the market is likely to demand a cleaner macro backdrop before rebuilding stronger conviction.”
According to OCBC’s report, official-sector demand continues to support the bank’s constructive medium-term view. It cited the World Gold Council’s 2026 survey, which found that 89% of central banks expect global official gold reserves to increase over the next 12 months, while 45% expect their own institutions to add to gold holdings. However, the report noted that this structural demand may not be sufficient to offset short-term pressure from higher real yields and a stronger US dollar.
